AVS, the Address Verification Service, compares the billing address a customer enters against the address the issuer has on file. The CVV check does the same with the three or four digit code printed on the card. Both come back as match or mismatch flags alongside the authorization response.
Why it matters
Neither check blocks anything on its own: the issuer can approve a transaction with a failed AVS, and it is the merchant’s rules that decide what to do with the flags. Used well they filter card testing, strengthen representment evidence and feed risk scoring. Two hard rules sit underneath: card security codes must never be stored after authorization, and AVS coverage is thin outside the US, UK and Canada, so global merchants cannot lean on it everywhere.